Day: September 12, 2024

The Dow Jones Industrial Average sold off 470 points Wednesday, as Wall Street digested inflation news with a surprise reading on the consumer price index, or CPI. An early earnings loser on the stock market today was GameStop (GME), which plunged 14%.

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Interest Rate Cuts Coming: Implications For Investors Ahead Of The September Fed Meeting

After the opening bell, the Dow Jones Industrial Average fell 1.2%, while the S&P 500 dropped 0.7%. The tech-focused Nasdaq composite inched lower in early trading.

Early Wednesday, the 10-year Treasury yield ticked higher to 3.66%. Oil prices rebounded more than 2%, lifting West Texas Intermediate futures to around $67.30 per barrel, as Hurricane Francine caused production shutdowns in the Gulf of Mexico.

Among exchange traded funds, the Invesco QQQ Trust (QQQ) was down a fraction, as the SPDR S&P 500 ETF (SPY) moved down 0.5% after the open.

Apple Seeks Support As Netflix Tries To Stop Buffering And Break Out

Stock Market Today: CPI Report, GameStop

Early Wednesday, the CPI rose 0.2% for the month of August, with an annual increase of 2.5%. Econoday estimates expected a 0.2% monthly rise, with a yearly increase of 2.6%. The core CPI, excluding food and energy, climbed 0.3% on the month, hotter than the 0.2% estimate. Year over year, the core CPI rose 3.2%, in line with estimates.

A broad array of stocks were in motion following Tuesday night’s presidential debate between former President Donald Trump and Vice President Kamala Harris. Solar and some EV-related stocks rallied in early trade. Shares of Trump Media & Technology Group (DJT) dived 13%.

Also early Wednesday, meme stock GameStop plunged around 14% after the company beat profit targets, but missed sales estimates in its second quarter. The company also disclosed an “at-the-market” stock offering of up to 20 million shares.

Nvidia Stumbles, Tesla Skids While This Mag 7 Stock Is Ripe For A Breakout

Dow Jones Falls

On Tuesday, the Dow Jones Industrial Average moved down 0.2%, while the S&P 500 moved up 0.5%. The tech-heavy Nasdaq composite gained 0.8%.

During Tuesday’s IBD Live show, the IBD Live team discussed the current trading conditions and how investors should handle the stock market today.

Now is an important time to read The Big Picture column amid the ongoing market action. Also, be sure to read how to adjust to changing market conditions, with IBD’s new exposure levels.

Nvidia Loses Ground To Apple And Microsoft. Tesla Takes Out Broadcom.

Stock Market Today: Best Stocks To Watch

Among the best companies to watch on the stock market today are Costco Wholesale (COST), Netflix (NFLX), Taiwan Semiconductor Manufacturing (TSM) and Uber Technologies (UBER).

Notable Dow Jones components are Amazon.com (AMZN), Apple (AAPL), Home Depot (HD), IBM (IBM) and Microsoft (MSFT), which regained its 200-day moving average Tuesday.

Apple and Uber were featured in the Stocks Near A Buy Zone column.

There was only one new stock on IBD MarketSurge‘s “Breaking Out Today” list Tuesday despite the stock market rebound. Tyler Technologies (TYL) is trying to break out past a 593.50 flat-base entry.

Further, there are only a handful of stock ideas on the site’s “Near Pivot” list. To find more stock ideas, check IBD Stock Lists like IBD 50, Big Cap 20 and Stocks Near A Buy Zone.

Get Real-Time Buy And Sell Alerts On Stock Market Leaders With IBD Leaderboard

Dow Jones: Home Depot, IBM

Among Dow Jones components, Home Depot is approaching a new handle buy point at 378.58, according to MarketSurge pattern recognition. Shares were down 0.8% early Wednesday.

Meanwhile, IBM is trading at the top of its buy range past its latest entry, a cup-with-handle buy point at 196.26. IBM stock rose 0.4% Wednesday.

Outside the Dow Jones index, retailer Costco continues to flirt with a 896.67 cup-base entry. The stock edged down Wednesday morning.

Streaming giant Netflix remains under its late-stage base’s 697.49 buy point following recent declines. Netflix stock was up a fraction Wednesday.

And Taiwan Semiconductor Manufacturing is building a cup with handle that has a 175.45 entry, and it gained 1.9% Wednesday morning.

Finally, Uber stock is about 5% away from a 75.40 double-bottom entry. Uber shares were off 0.5% early Wednesday.

Find The Best Stocks To Buy And Watch With IBD Stock Screener And IBD Screen Of The Day

Stock Market Today: Companies To Watch

These are four stocks in or near buy zones in today’s stock market.

Source: IBD Data as of Sept. 10

Join IBD Experts As They Analyze Leading Stocks In The Stock Market Today On IBD Live

Magnificent Seven Stocks: Nvidia, Tesla, Alphabet

Among Magnificent Seven stocks, Alphabet (GOOGL), Nvidia (NVDA) and Tesla (TSLA) traded mixed in early trading.

Google parent Alphabet gave up support around the 200-day line in recent sessions. After falling Tuesday, shares bounced 0.4% in early trades Wednesday.

On Tuesday, Nvidia tried to rebound from its lowest level since its early August lows. Shares rallied 2.7% in Wednesday’s action.

And Tesla fell 2.1% Wednesday morning, set to snap a two-day win streak. Shares of the electric-vehicle leader are attempting to regain their 50-day line.

Dow Jones Leaders: Amazon, Microsoft

Among Dow Jones components in the Magnificent Seven, Amazon, Apple and Microsoft traded mixed after Wednesday’s stock market open.

Amazon shares are again rebounding from support at their 200-day moving average. The stock was down 1% Wednesday morning.

Apple stock is forming a V-shaped cup with handle that has a 232.92 buy point. Shares rose 0.1% early Wednesday.

Microsoft shares closed back above the 200-day line Tuesday, and on Wednesday morning the stock inched higher.

Be sure to follow Scott Lehtonen on X at @IBD_SLehtonen for more on growth stocks, the Dow Jones Industrial Average and the stock market today.

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If you’re a bargain hunter, there are some deeply discounted stocks you might want to consider buying right now. These stocks aren’t trading at just 52-week lows, they are trading at multiyear lows. They haven’t been trading at these levels in more than five years — and some have never been this low.

Of course, there is a risk that comes with these stocks. They are trading down for good reasons, but there’s also a lot of potential upside. Ultimately, it can come down to how much risk you’re willing to tolerate.

Grocery Outlet (NASDAQ: GO), Dollar General (NYSE: DG), and Spirit Airlines (NYSE: SAVE) are three cheap stocks right now for various reasons. Are they worth a closer look as turnaround plays?

1. Grocery Outlet

Grocery stocks are generally stable investments investors want to hang on to. But that hasn’t been the case with Grocery Outlet. This retailer exclusively manages supermarket locations offering discounted, overstocked, and closeout products from name-brand and private-label suppliers.

Grocery Outlet’s stock was already trading off a bit from mid-2022 highs, but then it made a sizable acquisition in April 2024 that boosted investor worries. On April 2, the company bolstered its presence in multiple markets when it finalized the purchase of United Grocery Outlet. However, investors were unimpressed with the combined company’s performance. Shares are down 37% since January and trade at an all-time low for Grocery Outlet, which went public in 2019.

The problem is that expenses are rising and already thin margins are getting squeezed even further. Getting bigger has not led to a stronger bottom line. In the most recent quarter, which ended in June, Grocery Outlet’s profits fell by 43% to just $14 million on revenue of $1.1 billion. Profits are down, in part, because the retailer is making system upgrades. CEO RJ Sheedy Jr. said the upgrades are now in place and financials should improve from this point, but investors remain hesitant.

Investors considering this stock will need to have some faith that the CEO can turn things around. I would hold off on buying this food stock for at least a couple more quarters until Grocery Outlet proves Sheedy is right in his assertion and its financials are in better shape.

2. Dollar General

Discount stores are defensive stocks. They tend to offer investors stability during tough economic times. They also tend to be good options for long-term growth. Defensive stock Dollar General, however, has been underwhelming in this regard lately. Along with labor issues and safety problems at its stores, its results show some weakness, especially when compared to its peers.

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In August, Dollar General reported Q2 results that showed net sales up roughly 4% year over year to $10.2 billion, but same-store sales were only up by 0.5%. The company appears to be relying heavily on new store openings for growth. That has not translated into a better bottom line: Dollar General’s operating profit in Q2 fell by 21% year over year to $550 million. While Dollar General is still reporting growth, it’s also reporting that its core customers are “financially constrained.”

This is not a phrase investors want to hear and, as a result, Dollar General stock hasn’t traded at lower levels since 2017.

This can be a turbulent time to buy the stock, but it can potentially be a good long-term play because as economic conditions improve and its core customer is in better shape, that could turn the tide for the stock. The big question is how long that process could take. If you’re willing to be patient and hold on for what could be a bumpy ride with the stock, Dollar General might be a good contrarian investment to add to your portfolio today.

3. Spirit Airlines

Share prices of low-cost carrier Spirit Airlines went over a cliff in January after a judge blocked its merger with JetBlue Airways. Spirit’s stock hasn’t recovered from that decision. It has since gone into an even steeper tailspin as investor concerns mount that the airline might not be able to survive in the long run.

Operating revenue through the most recent period, which ended on June 30, totaled $1.3 billion and was down 11% year over year. More concerning was Spirit’s $152.5 million operating loss. It has also burned through $270 million in cash through its day-to-day operations over the past six months.

The company says it has $1.1 billion of available liquidity, but its operations don’t appear to be sustainable right now, and that’s the big risk for investors. Spirit Airlines trades at an all-time low (it went public in 2011), and the danger is that without a reason to believe its operations will improve or that an acquisition can save the business, things might not get a whole lot better for the stock anytime soon.

Investors should tread carefully with Spirit Airlines stock — it could be the riskiest one on this list.

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3 Stocks That Haven’t Been This Cheap in More Than 5 Years was originally published by The Motley Fool

After a hotter-than-expected inflation reading on Wednesday, markets have quickly moved to price in a higher likelihood that the Federal Reserve will opt for a smaller, more conservative interest rate cut at its September meeting. A bigger reduction could send stocks reeling.

As of Wednesday, investors were placing the probability of the Fed lowering rates by 50 basis points at its meeting next week at just 13%, down from the 44% chance seen a week prior, per the CME FedWatch Tool.

Some strategists have said that a 25 basis point cut would be a more welcome sign from the Federal Reserve.

Yardeni Research chief markets strategist Eric Wallerstein reasoned the Fed likely wouldn’t cut by more than 25 basis points “absent recessionary conditions or a financial crisis emerging.”

Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards

“For everyone who’s asking for a 50 basis point cut, I think they should really reconsider the amount of volatility that would cause in short-term funding markets,” Wallerstein told Yahoo Finance. “It’s just not something the Fed wants to risk.”

To Wallerstein’s point, while the most recent jobs report showed continued signs of slowing in the labor market, economists largely reasoned it didn’t reveal the substantial cooling that many believed would be needed to prompt a deeper cut from the Fed. The risk is that significant deterioration in the job market indicates a recession.

Meanwhile, Wednesday’s Consumer Price Index (CPI) report showed that on a “core” basis, which strips out the more volatile costs of food and gas, prices in August climbed 0.3% over the prior month, above Wall Street’s expectations for a 0.2% increase.

“The unwelcome news on inflation will distract slightly from the Fed’s renewed focus on the labor market and makes it more likely that officials stick with a more measured approach to easing, beginning with a 25 [basis point] cut next week,” Oxford Economics deputy chief US economist Michael Pearce wrote in a note to clients on Wednesday.

Some on Wall Street have also pointed out that a 50 basis point interest rate cut could create a more ominous sign about the health of the US economy than the central bank would like to portray.

“A 50 basis point cut would reek of panic, and it’s almost like we’re totally behind the curve at this point,” Jennifer Lee, BMO Capital Markets senior economist, told Yahoo Finance.

DataTrek co-founder Nicholas Colas analyzed each Federal Reserve rate-cutting cycle since 1990. Among the five cutting cycles over that time period, both times the Fed began its cycle with a 50 basis point cut (in 2001 and 2007), a recession soon followed.

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“While the data here is sparse, there is something to be said for associating an initial cut of 25 basis points with a midcycle policy correction and 50 basis point as signaling the Fed is too far behind the curve to avoid a recession,” Colas wrote in a note to clients on Wednesday morning. “Chair Powell and the rest of the FOMC certainly know this history. Their first cut will almost certainly be 25 basis points.”

As of Wednesday morning, markets are expecting 100 basis points of cuts from the Federal Reserve this year. More clues on the Fed’s thinking will come on Sept. 18 when the Federal Reserve releases its Summary of Economic Projections, including its “dot plot,” which maps out policymakers’ expectations for where interest rates could be headed in the future.

Wallerstein reasoned that if the total amount of Fed cuts this year falls short of the market’s expectations, that isn’t necessarily a bad thing for stocks.

“If those rate cuts get priced out because growth is stronger than expected and GDP comes in strong for the third quarter and the labor market indicators aren’t too bad, and we keep seeing consumer spending [increasing], then stocks will have more room to run as earnings continue to grow,” Wallerstein said.

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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This story was originally published on Restaurant Dive. To receive daily news and insights, subscribe to our free daily Restaurant Dive newsletter.

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UPDATE: September 11, 2024: This article has been updated with statements from Dickey’s Barbecue Pit.

Dive Brief:

• Smokin’ Dutchman Holdings, a four-unit Dickey’s Barbecue Pit operator in Michigan, filed for Chapter 11 Bankruptcy protections on Monday.

• The operator listed franchising requirements as a factor driving it to file for bankruptcy, saying Dickey’s “imposed extreme and unreasonable financial demands,” according to a declaration by Smokin’ Dutchman CEO Krage Fox.

• Dickey’s is the latest restaurant brand to see a franchisee turn to courts for relief from onerous debt obligations. But while other restaurant chains have generally seen operators fault macroeconomic problems for bankruptcy, Smokin’ Dutchman largely laid responsibility for its fiscal problems at Dickey’s doorstep.

Dive Insight:

Fox did not explain what aspects of Dickey’s franchising requirements caused financial problems. Dickey’s charges its franchisees a 6% royalty rate and a 3% marketing rate, which is not substantially above the rates charged by many other brands, according to its franchise disclosure document. Dickey’s did not respond to a request for comment regarding Smokin’ Dutchman’s Chapter 11 filing.

Jeff Gruber, Dickey’s SVP of franchise relations, wrote in an email to Restaurant Dive that Smokin’ Dutchman’s characterization of its franchising terms was inaccurate.

“When Smokin’ Dutchman communicated its individual difficulties roughly 18 months ago, Dickey’s responded by providing extensive supplemental operational support and corporate resources in an effort to stabilize Smokin’ Dutchman’s business operations,” Gruber said. Dickey’s, Gruber said, will continue to offer support to Smokin’ Dutchman.

Additionally, Gruber said that Dickey’s is in the middle of a capital reinvestment program intended to “provide restaurant upgrades, such as new exterior signs, store interior refreshes, technology hardware upgrades and local advertising across the brand.”

Dickey’s doesn’t disclose sales projections for franchised units in its FDD, so it’s difficult to estimate the performance of individual units. However, Smokin’ Dutchman’s annual revenue for 2023 was $3,336,000. Spread across four units, that’s roughly $830,000 per store. 

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Dickey’s unit count hit 485 in 2021 and held steady at that level through the company’s fiscal 2022, before falling in fiscal 2023 due to the net loss of 15 franchised stores and one company-owned store, according to the brand’s FDD.

The brand’s units tend to be fairly small, according to its FDD, with traditional restaurants ranging from 1,500 to 2,200 square feet. Non-traditional locations designed to operate in places like food courts, airports and stadiums range from 400 to 1,000 square feet, and off-premise-only stores range from 1,000 to 1,300 square feet in size. Smokin’ Dutchman’s units, according to Google Maps Streetview photographs of the units, all appear to be traditional restaurants. This matches the FDD’s description of real estate strategy for traditional Dickey’s units, which are “located in suburban shopping centers or stand-alone buildings located on busy streets.”